Ring in the New Year with a Financial Check Up

At the time of writing this post, we are all poised to careen over the “fiscal cliff.” The White House and Congress are entrenched in their positions and it is we, the taxpayers, who stand to lose in this stalemate. My wish is that they all sit down now and work this out like adults. But with all the uncertainty swirling around, our tax laws could be in for a dramatic overhaul!

Meanwhile, what can you do to prevent falling over a fiscal cliff of your own? Knowing what you need and being prepared are the keys to avoiding financial chaos in your own life!

Write or update your Will

Writing a Will gives you the opportunity to provide for your loved ones, and determine how your estate will be distributed. Wills are not static documents. It is essential they be updated as your circumstances change. During 2012, did you acquire new assets, marry, divorce, adopt a child, have a baby, or welcome new grandchildren? Significant life events such as these may trigger needed changes to your existing Will.

Without a Will, complete strangers will decide how to split up your estate based on your state law when you die. If parents fail to appoint a guardian for minor children in a Will, their future may be decided by a family law judge.

Buy or update your life insurance

The purpose of life insurance is to meet your family’s expenses when you are gone. To figure out how much coverage you need, estimate the costs to pay off your debts such as a mortgage, car loans, and college funds for children. Once you cover these expenses, your family may be able to live on ½ of your gross income. Multiply that number by the number of years your children will be minors, or number of years your spouse will need financial support. Add the numbers together to come up with a goal for insurance coverage.

Look at covering both spouses, even if one doesn’t work outside the home. If that spouse should die, imagine what it would cost to pay for services like cooking, cleaning, laundry, shopping, childcare, and so forth.

Term life insurance carries a fixed premium for the life of the term, and can be quite affordable, even for large coverage amounts. Do your research and be sure to comparison-shop.

Visit www.lifeinsurance.org for a general overview about life insurance coverage, ideas on shopping for life insurance, and questions for assessing your insurance needs.

Check your beneficiary designation forms

After your death, many assets, including life insurance policies, retirement funds, and bank accounts transfer according to the beneficiary you name on a form. If you have not designated a specific beneficiary, that asset will become part of your estate to be probated when you die.

Now is the time to make sure those forms reflect your current wishes. If you divorced during 2012, your ex spouse may still be listed as the beneficiary on many of your assets. I have heard horror stories of people forgetting to change their beneficiaries, and an ex raking in thousands of dollars in life insurance proceeds or other assets after the other spouse dies. As unfair as it may seem, it is our responsibility alone to make changes as our life circumstances change. So, look over those forms now to make sure they’re correct!

You can often find forms online or call the customer service number on your account statements if you have not yet designated a beneficiary.

Your Online Information

These days, so many of us manage financial transactions online. It is essential to inform a trusted family member about all of your online accounts. And don’t forget to tell them where to find your list of user names and passwords. Without login information, it can be a grueling process to piece together your online “estate.” Completing this often overlooked step, can give you the peace of mind you need to avoid a personal fiscal cliff.

LSS is dedicated to your financial wellness. Visit our blog often, and tell us what you think about our posts, and the topics you want to hear about. Want more information about Conquering Your Debt? Call us at 888.577.2227 or visit our website at ConquerYourDebt.org.

From all of us at LSS….We wish you a safe, healthy and happy New Year!